Berkshire ‘A’ Shares, Soon Available In Pennies

Berkshire Hathaway’s stock picker-in-chief Warren Buffett is one of the world’s great bargain hunters. Investors soon may be able to get an ever-so-slightly better deal on Berkshire’s famously pricey ”A” shares.

Starting Sept. 16, the New York Stock Exchange plans to begin trading and quoting Berkshire Hathaway Inc. in pennies, according to a Thursday notice from the exchange. That means that the stock’s mammoth price – $168,180 on Thursday afternoon – will move in one-cent increments, rather than the current ten cents.

Right now, if someone wanted to boost the bid for one of Berkshire’s A shares on the NYSE, he or she would need to quote the price at 168,250.10, rather than 168,250.01, as one would do with less-dear stocks. The Big Board is making the change after rival exchanges already have shifted to trading the Berkshire shares in pennies, potentially creating difficulties between NYSE’s policy of rounding trades to the nearest ten-cent increment and U.S. market rules requiring trades to occur at the most-competitive price available nationally.

Traders aren’t likely to notice much difference – an average 370 Berkshire A shares change hands per day, a miniscule number compared to a stock like Bank of America Corp., where more than 88 million shares trade daily, according to data from FactSet.

However, the shift comes as exchanges and brokers have broadly backed the idea of again trading securities in broader increments, like five or ten cents.

Enabling more-expensive or thinly traded stocks to move in wider “ticks” makes it easier on traders who quote prices in such securities, experts say. Greater profits per share for the traders and salesmen who deal in smaller-cap stocks could mean an incentive to keep such securities liquid and promote them to investors, the thinking goes.

NYSE is one backer of the idea. “Many other global markets have far more flexible tick size regimes,” Big Board officials wrote in a March blog post. “Some academic research shows this lack of flexibility within the U.S. markets may increase investor costs” by reducing liquidity, NYSE officials wrote.

The shift may mean less to Mr. Buffett, who long refused to list Berkshire’s stock on the NYSE because he didn’t want it to become too heavily traded; the shares traded on the over-the-counter market until 1988 when they listed on the Big Board. That view didn’t stop Mr. Buffett from discussing a potential purchase of the NYSE late last year, ahead of its agreed sale to rival IntercontinentalExchange Inc., people familiar with the matter said earlier this year.